SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 10549 QUARTERLY REPORT UNDER SECTION 13 or 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended Commission file number September 30, 1999 0-20217 (Exact name of registrant as appended in its charter) COUNTRYLAND WELLNESS RESORTS, INC. (State or other jurisdiction of incorporation or organization) (I.R.S. Employer identification No.) Nevada 84-068750 (Address of principal executive offices) (Zip Code) 2205 Purple Majesty Court Las Vegas, Nevada 89117 (Registrant's telephone number, including area code) (702) 240-4408 -1- Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 of 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such report), and (2) has been subject to such filing requirements for the past 90 days. Yes X No Indicate the number of shares outstanding of each of the issuer's classes of common stock as of the latest practicable date. Title of Class Common Class 90,777,573 COUNTRYLAND WELLNESS RESORTS, INC. Index Page Part I FINANCIAL INFORMATION Item 1 Financial Statements Balance Sheet 3 Notes to Financial Statements 4 Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 6 COUNTRYLAND WELLNESS RESORTS, INC. BALANCE SHEET September 30, 1999 and 1998 ASSETS September 30, September 30, 1999 1998 (Dollars In Thousands) Current assets Cash $ 932,482 $ 862,726 Marketable securities (Note 1) 404,750,000 1,100,161,949 Gold in storage (Note 9) 0 27,317,000 Receivables Current - contracts 2,464,477 3,207,883 Retention - contracts 271,872 567,789 Interest, related (Note 2) 63,964 61,836 Other 1,525 7,394 Total receivables 2,801,838 1,132,186,530 Costs and estimated earnings in excess of billings (Note 3) 656,700 207,769 Notes receivable related (Note 4) 747,114 81,635 Note receivable (Note 5) 32,305 530,000 Total current assets 5,170,439 5,688,981 Property and equipment (Note 1) Transportation equipment 353,795 353,795 Operating equipment 277,821 245,389 Office equipment and furnishings 84,867 84,867 Leasehold improvements 32,876 36,696 749,359 720,747 Mining properties (Note 10) 2,191,187,000 2,208,731,000 Less: Accumulated depreciation (480,479) (397,863) Net property and equipment 2,191,450,880 2,209,053,884 Other assets Federal income tax deposit 384,627 371,138 Note receivable, related (Note 4) 65,724 64,724 Deposit 96,914 0 Total other assets 547,265 435,862 Total assets 2,600,652,904 3,346,929,395 The accompanying notes and auditors' report should be read in connection with these financial statements. 2 COUNTRYLAND WELLNESS RESORTS, INC. BALANCE SHEET SEPTEMBER 30, 1999 AND 1998 LIABILITIES AND STOCKHOLDERS' EQUITY September 30, September 30, 1999 1998 Current liabilities Bank line of credit (Note 6) $ 600,000 $ Trade accounts payable 576,089 833,253 Stockholder distributions payable 263,000 3,999,900 Accrued expenses 163,990 72,889 Billings in excess of costs and 68,600 estimated earnings (Note 3) 620,565 537,990 Total curent liabilities 2,292,244 5,444,032 Stockholders' equity Common stock, par value $ 200,000,000 shares authorized, 90,777,573 shares issued and outstanding 272,332 272,332 Paid-in capital 385,418 385,418 Retained earnings 3,308,922 618,277 Total stockholders' equity 2,594,393,988 3,340,209,336 Total liabilities and stockholders' equity 2,600,652,904 3,346,929,395 The accountants' review report and accompanying notes should be read in connection with these financial statements. 3 COUNTRYLAND WELLNESS RESORTS, INC. STATEMENT OF INCOME FOR THE YEAR ENDED SEPTEMBER 30,1999 AND 1998 September 30, September 30, 1999 1998 Contract income $11,282,206 100.00% $15,039,822 100.00% Direct costs Labor and labor costs 3,202,457 28.38% 3,582,898 23.82% Materials 3,901,431 34.58% 6,131,363 40.77% Subcontracts 398,654 3.53% 295,237 1.96% Other 148,019 1.32% 76,841 0.51% Total direct costs 7,650,561 67.81% 10,086,339 67.06% Gross profit from contracting 3,631,645 32.19% 4,953,483 32.94% General and administrative expense 1,047,125 9.28% 2,203,997 14.65% Income from operations 2,584,520 22.91% 2,749,486 18.29% Other income (expense) Interest income 29,190 0.26% 146,977 0.97% Discounts 19,039 0.17% 24,921 0.16% Miscellaneous income 50,524 0.45% 128,884 0.86% Interest expense 178,216 1.57% (40,480) -0.27% Unrealized stock loss (170,844) -1.51% (676) - Total other income(expense) 106,125 0.94% 259,626 1.72% Net income 2,690,645 23.85% 3,009,112 20.01% The accompanying notes and auditors' report should be read in connection with these financial statements. 4 COUNTRYLAND WELLNESS RESORTS, INC. STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY FOR THE TEN MONTHS ENDED JULY 31, 1999 Common Common Paid Retained Total Stock Stock in Earnings Stockholders Shares Value Capital Equity Balance, September 30, 1998 13,750 244,500 140,918 618,277 1,003,695 Net income - - - 2,690,645 2,690,645 Balance July 31, 1999 13,750 244,500 140,918 3,308,922 3,694,340 The accountants' review report and accompanying notes should be read in connection with these financial statements. 5 COUNTRYLAND WELLNESS RESORTS, INC. STATEMENT OF CASH FLOWS FOR THE TEN MONTHS ENDED JULY 31, 1999 Cash flows from operating activities $ Cash received from customers 12,158,297 Cash paid to suppliers and employees (8,756,231) Interest received 20,208 Cash provided by operating activities 3,422,274 Cash flows from investing activities Purchases of equipment and improvements (28,612) Advances on notes receivable (666,479) Repayment of notes receivable 530,000 Proceeds from sale of marketable securities 212,473 Cash provided by investing activities 47,382 Cash flows from financing activities Advance on line of credit 600,000 Distributions to stockholders (3,999,900) Cash provided by financing activities (3,399,900) Net increase in cash 69,756 Cash at September 30, 1998 862,726 Cash at July 31, 1999 $ 932,482 The accountants' review report and accompanying notes should be read in connection with these financial statements. 6 COUNTRYLAND WELLNESS RESORTS, INC. STATEMENT OF CASH FLOWS (CONT'D) FOR THE TEN MONTHS ENDED JULY 31, 1999 Reconciliation of net income to net cash provided by operating activities Net income $ 2,690,645 Adjustments Depreciation 82,616 Gain on sale of marketable securities (50,524) Decrease (increase) in assets Receivables 1,043,064 Costs and estimated earnings in excess of billings (448,931) Deposits (142,708) Increase (decrease) in liabilities Accounts payable (257,164) Accrued bonuses 263,000 Accrued interest, related 163,990 Other accrued expenses (4,289) Billings in excess of costs and estimated earnings 82,575 Net cash provided by operating activities $ 3,422,274 The accountants' review report and accompanying notes should be read in connection with these financial statements. 7 COUNTRYLAND WELLNESS RESORTS, INC. NOTES TO FINANCIAL STATEMENTS JULY 31, 1999 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Company Activities Countryland Wellness Resorts, Inc. (the Company) is an electrical contracting firm operating primarily in the Northern Nevada area. The firm does new construction, retrofit and repair work on commercial and governmental projects. The work performed under cost-plus-fee and fixed-price contracts with various contracts being modified by incentive and penalty provisions. Company is engaged in starting a Life Extension (Wellness) Program and the mining of gold and silver. Financial Statement Classification In accordance with normal practice in the construciton industry, the Company includes in current assets and liabilities amounts realizable and payable over a period in excess of one year. Consistent with this practice, asset and liability accounts relating to construction contracts are classified as current. The lives of contracts entered into by the Company generally range from six to eighteen months. Property and Equipment Property and equipment are recorded at cost. Expenditures for renewals and betterments which extend the life or improve existing properties are capitalized. Maintenance and repairs are charged against income. Depreciation of property and equipment is provided principally on the straight-line method. For income tax purposes, the ACRS and MACRS methods of cost recovery are used. The estimated useful lives for financial statement purposes are as follows: Lives (years) Transportation equipment 5 Operating equipment 4-7 Office equipment and furnishings 5-7 Leasehold improvements 39 Depreciation expense for the period ended July 31, 1999 was $82,616. Revenue and Cost Recognition Revenues from contracts are recognized on the percentage-of-completion method based on the proportion of costs incurred on the contract to total estimated contract costs. Material estimated losses prior to completion are recognized in their entirety when apparent. Costs and estimated earnings in excess of amounts billed are classified as current assets. Billings in excess of costs and estimated earnings are classified as current liabilities. See accountants' review report. 8 NOTE 1 The Company placed six (6) of its bank guarantees issued by BNI Bank with Striker Gold Mines, Ltd. in a joint venture that will produce 9% per day to the Company. For 3,000,000 shares of common stock (restricted) the Company assigned to Las Vegas Entertainment Network, Inc., a public company trading on the small caps of the NASDAQ Stock Exchange. At the time of the transaction these shares of common stock had a value of $4,750,000. The Company has another transaction with U.S. Guarantee Corporation, a Nevada corporation where USGC has committed to the Company a loan of $400,000,000 by using the four (4) bank guarantees from Bank BNI, Indonesia however the Company has not received any funds from USGC. In preparing financial statements in conformity with generally accepted accounting principles, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Tax Method and Distributions The Company's stockholders have elected Subchapter S Corporation status. Under these provisions, the Company pays no Federal income tax. The Company's income is taxed to the stockholders in their individual tax returns. Cash and Cash Equivalents For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. NOTE 2: INTEREST RECEIVABLE, RELATED This represents accrued interest on a note from a related party. Management intends to collect this amount during the current period. NOTE 3: COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS Costs incurred on contracts in progress $ 4,420,487 Estimated earnings 2,629,588 Contract revenue earned to date 7,050,075 Less billings to date 7,013,940 Net under billings $ 36,135 See accountants' review report. 9 COUNTRYLAND WELLNESS RESORTS, INC. NOTES TO THE FINANCIAL STATEMENTS JULY 31, 1999 NOTE 3: COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROGRESS (CONT'D) The net under billings are included in the balance sheet as follows: Costs and estimated earnings in excess of billings $ 656,700 Billings in excess of costs and estimated earnings (620,565) $ 36,135 NOTE 4: NOTES RECEIVABLE, RELATED Notes receivable, related at July 31, 1999 consist of the following: Amounts Due Interest Within After Rate one year one year Unsecured note due from a major stockholder of a related company. The entire balance was repaid in August 1999. 7.00% $ 200,000 - Note secured by real estate, due from a key employee of the Company. Principal and interest payments of $882 are due monthly. 7.00% 5,497 $ 65,724 Unsecured note due from a key employee of the Company. The entire balance is due December 31, 1999. - 23,000 - Unsecured note due from a company owned by the major stockholders of the Company. The entire balance is due December 31, 1999. 7.00% 518,617 - $747,114 $ 65,724 See accountants' review report. 10 COUNTRYLAND WELLNESS RESORTS, INC. NOTES TO THE FINANCIAL STATEMENTS JULY 31, 1999 NOTE 5: LINE OF CREDIT The Company las a line of credit agreement with a bank subject to a $1,000,000 limit. The credit line is secured by the accounts receivable, inventory and equipment of the Company and bears interest at prime, (8.0% at July 31, 1999) payable monthly. The agreement expires April 30, 2000. There was a balance of $600,000 owing on the line at July 31, 1999. NOTE 6: ACCRUED INTEREST, RELATED This represents interest payable to the majority stockholder of the Company. The amount will be paid on or before December 31, 1999. NOTE 7: CONTRACT BACKLOG The following schedule is a reconciliation of construction contract backlog representing signed contracts as of July 31, 1999: Balance, September 30,1998 $ 5,219,287 Contract adjustments 697,511 New contracts during the year 9,580,125 15,496,923 Less: Contract revenue earned 11,282,206 Balance, July 31, 1999 $ 4,214,717 NOTE 8: CONCENTRATIONS OF CREDIT RISK The Company maintains its cash balances in a financial institution. The balances in the financial institutions are insured by the Federal Deposit Insurance Corporation up to $100,000. At July 31, 1999, the Company's uninsured cash balances total $ 1,226,534. See accountants' review report. 11 NOTE 9: With respect to gold in storage at the NDS Bonded Warehouse at Dominguez Hills, California, the Company has determined that the warehouse went out of business about three or four years ago and said gold deposit has been declared a casualty loss. In the opinion of the Company Counsel the gold has been lost or stolen, and in any event is missing. The loss to the Company is $27,317,000 which the Company has no insurance to cover. The matter is currently under investigation. NOTE 10: PROVEN GOLD AND SILVER RESERVE ON MINING PROPERTIES The process of estimating mineral reserves is very complex, requiring significant subjective decision in the evaluation of available geological, engineering, and economic data for each reserve. The data for a given reserve may change substantially over time as a result of additional development activity, production under varying economic conditions, etc. Consequently, material revision to the existing reserve estimates may occur in the future. Although, every reasonable effort was made to ensure that the reserve estimates reported represent the most accurate assessment possible, the significance of the subjective decision required, the variances in the available data for various reserves, make these estimates generally less precise than other estimates in connection with financial disclosure. Proven reserves are estimated quantities of gold and silver which geological and engineering data demonstrate, with reasonable certainty, to be recoverable in future years from known reserves under existing economic and operating conditions. Stickel and Associates, independent consultants in applied geology, geophysics and engineering, has estimated 7,000,000 troy ounces of gold and 19,000,000 troy ounces of silver. The values of these reserves based on average market prices as of September 30, 1999 and September 30, 1998 are as follows: 9/30/99 9/30/98 (Dollars in Thousands) Gold 7,000,000 troy ounces @$297.90/troy ounce $2,085,300,000 @$296.40/troy ounce $2,074,800,000 Silver 19,000,000 troy ounces @$5.573/troy ounce $ 105,887,000 @$5.200/troy ounce $ 98,800,000 12 NOTE 11: The Company acquired Network Electric Company on September 19,1999, a Nevada corporation engaged on the business of electrical contractor for the sum of $20,000,000 payable by a Pay Out Order No. 0000887531 to be paid out from proceeds of the loan for $400,000,000 from U. S. Guarantee Corporation or, in the event such funds are not forthcoming, from proceeds of the trading program with Striker Gold Mines, Ltd. NOTE 12: CHANGE OF NAME AND OTHER MATTERS The Board of Directors adopted on September 15, 1999 the following resolutions: a. The name of the Company was changed to Countryland Wellness Resorts, Inc. b. The China International Packaging Leasing Co., Ltd. merger was cancelled. c. The Company has acquired Network Electric Company as a wholly owned subsidiary. d. The Company has entered into a Joint Venture Agreement with Striker Gold Mines, Ltd. e. The Company has entered into a Loan Agreement with U.S. Guarantee Corporation. 13 INDEPENDENT'S ACCOUNTANTS' REPORT To the Board of Directors Network Electric Company (A Nevada Corporation) Sparks, Nevada Our report on the review of the balance sheet of Network Electric Company (a Nevada Corporation) as of July 31, 1999 and the related statements of income, changes in stockholders' equity, and cash flows for the ten months then ended, appears on page 1. Our review was made for the purpose of expressing limited assurance on the basic financial statements taken as a whole. The information on page S-2 through S-7 of this report is presented only for the purpose of additional analysis and is not a required part of the basic financial statements. Such information is the representation of the management of Network Electric Company, and has been subjected to the inquiry and analytical procedures applied in the review of the basic financial statements and similarly, no opinion as to such information is being expressed. Based on our review, we are not aware of any material modifications that should be made to the supplemental information. Brown, Fink, Boyce, & Co. Sacremento, California August 18, 1999 Part II OTHER INFORMATION ITEM 1 Legal Proceedings 7 ITEM 2 Changes in Securities 7 ITEM 3 Defaults upon Senior Securities 7 ITEM 4 Submission of Matters to a Vote of Security Holders 7 ITEM 5 Other Information 7 ITEM 6 Exhibits and Reports on Forms 8-K 7 ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations Results of Operations Summary of significant Accounting Policies Nature of the Business: Countryland Wellness Internet Network Trust, a Nevada trust was originally incorporated in Colorado on October 29, 1974, as Minerals Mining Corporation. The name was first changed to Grand American International Corporation, then Continental Wellness Casinos Corp., and then, on December 22, 1997, to Continental Wellness Casinos Trust, a real estate investment trust. On December 16, 1998 the Company merged with China Internat- ional Packaging and Leasing Co., Ltd., and the present name was adopted. The Company had been engaged in the discovery and development of precious metals with mining properties located at Quincy, Plumas County, California. The Company has 750 acres of land where 39 unpatented mineing claims are located. All assessment work has been done at the mines and all reports have been filed with the Bureau of Land Management, Sacramento, California and the County of Plumas in accordance with the mining rules and regulations. The Company has permits to operate the mines from the United States Forestry Department, Quincy, California. The Company presently does not intend to re-open mining operations to recover the gold and silver in the proven reserves, and will not do so until the price of gold increases significantly. The Company is in the process of getting its live longer center, a longevity members association, with the purpose of making people live longer by using preventive medicine with genes testing for discovery of predominant illness in the different subjects and repair defective genes by genetic engineering followed with a program of exercise and nutrition. The hotel's guests sign a long term rental agreement for a room or suite at the Company's resort hotel and casino for a week or two per year for a period of ten years, payable in advance, and also receive one week of care at the center. The rental cost is $ 1,000.00 per week per year per guest. The transaction with China International Packaging and Leasing Co., Ltd. was cancelled. The Company acquired Network Electric Company for a Pay Out Order to be paid from funds due to the Company. The Company entered into a Loan Agreement with U.S. Guarantee Corporation and received a Loan Committment from them in the amount of $400,000,000 and the Company placed as collateral for this loan four bank guarantees from Bank BNI Indonesia, loan still pending funding. The Company entered on a Joint Venture Agreement with Striker Gold Mines, Ltd. to invest six bank guarantees from Bank BNI Indonesia to be used on an Investment Program that will regenerate 9% per day and the Company will receive 50% of the profit. The program is ready to start in about 30 days. The Company entered into an agreement with Las Vegas Entertainment Network, Inc., a public traded Company listed on the small caps of the NASDAQ Stock Exchange were the Company given the right to LVEN to use one of the guarantee issued by Bank BNI Indonesia and loan a Gold Certificate (Restricted) for 10,600 troy ounces of gold and the Company received 3,000,000 (Restricted) shares of Common Stock from LVEN. Liquidity and Capital Resources The expansion and diversification of the Registrant's business has occurred selectively for the past two years through the development of the Registrant's mines for the production of gold and silver and other precious metals. The Registrant is organizing its longevity center, a wellness resort for life extension. The strategic and aggressive growth program enables the Registrant to provide future earnings for the Company. The Registrant is confident that the program of long term room rentals in a resort hotel and casino in conjunction with a longevity center, will increase sales and produce a positive cash flow. PART II - OTHER INFORMATION Item 1. Legal Proceedings As of September 30, 1999 the Company was not a party to any material legal proceedings other than ordinary routine litigations incidental to its business. Item 2. Changes in Securities Not applicable Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of Matters to a vote of Security Holders Not applicable Item 5. Other Information Not applicable Item 6. Exhibits and Reports on Form 8-K (a) Exhibits: "A" Geological Evaluation of Gold Claims Reserves. (b) Reports on Form 8-K Amendment No. 9 SIGNATURES Pursuant to the requirements of Section 13 of 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. COUNTRYLAND WELLNESS RESORTS, INC. By (S) FERNANDO JUAN DATED: November 9, 1999 Fernando Juan Vice President and Chief Financial Officer Exhibit "A" GEOLOGIC EVALUATION OF GOLD CLAIMS IN PLUMAS COUNTY, CALIFORNIA STICKEL & ASSOCIATES P.O. Box 91, Tustin, CA 92681 (714) 751-4742 May 14, 1985 Minerals, Mining and Energy Corp. 7750 El Camino Real, Suite K Rancho La Costa, California 92008 Attention: Stewart Douglas, President Subject: Review of Literature and Inspection of Gold Claims in Plumas County, California, Black-hawk, Alan, MMC and Dean Lode Claims conconsisting of 750 acres. References: 1) Geology of the Pulga and Bucks Lake Quadrangles, Butte and Plumas Counties, California, USGS Prof. Paper 731, date 1973. 2) Examination and Sampling of the Blackhawk and Section 13 Claims, Plumas County, California, by Win. H. Bird, date June 1, 1976. 3) Bucks Lake Quadrangle, Map, USGS, 1:62,500, DATE 1950. Gentlemen This letter presents our present geological engineering evaluation of the subject gold and silver claims that are located in Plumas County, California. We visited and inspected the property on April 19 and 20, 1985. The property consists of approximately 750 acres of lode claims with a reported overlying of a few placer claims. The properties lie about 5 and 11 miles directly west of Quincy on the Bucks Lake Road. The claims are named Blackhawk, Alan, MMC, and Dean. The Blackhawk, Alan and MMC claims lie in the northwest corner of Section 13, T24N, R8E. GEOLOGY These claims lie along the southwest and northwest borders of a northwest trending zone or band of highly fractured peridotite altered to serpentine. Broad fault zones bound the peridotite bodies or bands and there are no indications of heat alteration. There has been no production from hard rock mining, however, significant placer hydraulicking and sluicing has occurred. The placer deposits occur in two periods of erosion, the Present and the Tertiary. Although, concentrations of gold have only been found in the Blackhawk and Dean claims, it does occur scattered throughout the peridotite. PRESENCE OF GOLD AND SILVER Reference 2 indicates that there is a conservative 10,000,000 tons of hard rock ore reserves. Rock Chip and channel samples were obtained from 10 to 50 foot sections of road cuts and outcrops on these claims and it is reported - assayed high in gold (Au). The highest gold value was 2.80 oz /ton, however, the overall average was .7 oz/ton. Silver(Ag) ranged from a trace to 2.62 oz/ton. These values varied greatly, depending upon the freshness of the outcrop. Assays also indicated the presence of platinoid metals. Total amount of gold and silver in these claims is 7,000,000 oz. of gold and 19,000,000 oz. of silver. These figures were compiled from data presented in Reference 2. It is reported that during the summer of 1983, approximately $30,000 worth of placer gold was dredged from one of the creeks flowing through the Blackhawk claims. This gold was dredged from an area of the creek about 100 yards long. Stickel 7 Associates warrant that our services are performed within the limits prescribed by our clients, with the usual thoroughness and competence of the geological engineering profession. No other warranty or representation, either expressed or implied, is included or intended in our proposals or reports or contracts. We appreciate the opportunity of presenting this report. If you have any questions, please contact this office. Very truly yours, STICKEL & ASSOCIATES By (S) J. F. STICKEL J.F. STICKEL RG 2999 JFS/hr April 25, 1986 It is our opinion that the described and proven indicated ore reserves are based on data as described above. STICKEL & ASSOCIATES By (S) J.F. STICKEL J.F. STICKEL, RG 2999